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THIS IS NOT A TIP OR RECOMMENDATION. I AM NOT A TIPSTER. PLEASE DO YOUR OWN RESEARCH. PLEASE READ THE DISCLAIMER ON THE HOME PAGE OF MY WEBSITE. IF YOU COPY MY TRADES, YOU WILL PROBABLY LOSE MONEY. I HAVE A VERY LARGE PORTFOLIO AND I USE DIVERSIFICATION TO SPREAD RISK ALONG WITH TRICKS LIKE HEDGING AND OCCASIONALLY BY THE USE OF STOPLOSSES - IF YOU BUY ANY STOCK YOU REALLY SHOULD FOCUS ON HOW IT FITS IN YOUR PORTFOLIO AND KEEP RISK MANAGEMENT AT THE FOREFRONT OF EVERYTHING YOU DO. BE AWARE THAT ALL INVESTORS/TRADERS GET THINGS WRONG AND MANY STOCK SELECTIONS WILL WORK OUT BADLY - MAKE SURE YOU UNDERSTAND THIS.
Boohoo.com BOO came out with Interim Results today and I thought they were superb. Of course, the Market thinks completely differently and the Shares got beat up 15% - it is my Biggest Holding so it did make me wince a little. Anyway, you can read the RNS for the Interims here: http://otp.investis.com/clients/uk/boohoo/rns/regulatory-story.aspx?cid=798&newsid=930898 The big stand out for me is the Growth Rate of the Revenues - up 106% over the 6 months (up 101% in Constant Currencies). Of course, many will trot out the “Revenue is Vanity, Profit is Sanity” adage and this is fair enough - but as often is the case, such simplistic phrases may not always be appropriate (bit like the “Never buy an IPO” which I think is just garbage). My take on this is that BOO is quite simply a Growth Company in the Hottest Growth Sector most of us will probably ever have the good fortune to trip over in our lifetimes - I cannot stress enough how unusual it is to have a Company that can grow at such a stellar pace - from recent memory, only Fevertree FEVR gets even remotely close (bored Readers might want to apply the kind of principles/modelling that I use in this Blog to FEVR and see what pops out at the end).
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I am totally frazzled today - my brain took an onslaught yesterday during a superb day with ‘Wheelie’s Summer Bash’ in full swing. I got a bit worried during the week with a few people dropping out and I had visions of me and a couple of mates and no one else there - as it happens the turnout was plentiful and easily 30 people turned up and maybe more because there were comings and goings all day and we even had 2 really interesting people turn up after 6pm which gave the day a second wind and a few of us diehards stayed until about 11pm when the Landlord shocked us all by saying we had to leave !!
After leaving the pub and dropping Mike @village_idoit off at Stirrups Hotel (as you can see it is a horsey, country kind of part of the UK and amazing it is just a few miles from my house) I ended up discussing Spreadbet DFB and Quarterly Funding Charges with my old buddy from college @InvestingMartin until about 1.30am as he was staying in my spare room. The scary thing is how it dawned on me that I have wasted £thousands and £thousands on using DFBs when Quarterlies are hugely cheaper - it was quite infuriating and didn’t exactly help my buzzing WheelieBrain calm down so I could actually sleep !!
I am sure many Readers will recognise the sentiment of “missing the Boat” and I regularly see this comment and I am also often asked “How can I justify buying a Stock which is hitting at New All Time Highs?”
In general I think this is a big challenge for New Investors in particular but I also know a lot of experienced Peeps who won’t buy something which is up at New Highs. This might be a Cognitive Error - correction, it definitely is a Cognitive Error !! For me there are 2 aspects to this puzzle. The first one is that if a Stock is making New All Time Highs (and therefore pushing into ‘Blue Sky Territory’ with no obvious Resistance Levels where Sellers will naturally come in) then it clearly has MOMENTUM. I deliberately have used Caps Lock there because we should all know by now that Stocks which possess Upwards Momo are something we should be looking out for and trying to buy; and on the flipside we really must be avoiding Stocks with Downwards Momentum.
So far it is fair to say that September has not been horrific but last week was quite difficult and my Portfolio was down about 1% - I am sure it could have been worse and the bid for Quantum Pharma QP. from Clinigen CLIN clearly helped. I managed to lower my Spreadbet Exposure a little bit more by TopChopping GLEN and HSBA but ideally I would like to reduce this a bit more and build my Cash up.
It was notable how the US Markets are still up at their Highs and I will cover this in a bit - but the big story really was the strength of Sterling after Mark Carney talked it up nicely by hinting at a Rate Rise - whether we will actually get one or not is yet to be seen but simply by opening his mouth the Bank of England Governor has achieved a fair bit of Monetary tightening without actually having to do anything. A Strong Pound against the Dollar should help lower the Cost of Imports and reduce the impact of Inflation which has been blamed on causing a Slowdown in recent Months for the UK Economy.
Of course the big event at the moment is the Hurricane hitting Florida, Cuba and the Islands - we are so lucky here in the UK to really have very benign weather (and we have few Animals that will eat you or poison you !!).
Obviously once the Storms have passed there will be much rebuilding to do and life will be extremely tough for the People involved for a long time I would guess - especially on the Islands where there are very few inhabitants and the ability to rebuild (and the necessary dosh) will not be plentiful. In terms of Stocks these kinds of awful events rarely have a long-lasting effect although perhaps we will see a bit of a Sell-off early next week, especially in the US Markets, but I doubt it will be anything too dramatic. Of course Markets are often fragile at this time of year so perhaps these events could trigger further falls and that remains to be seen. For specific Stocks, there might be a few that benefit like AGK Aggreko (who do Power Generators) and those that might be involved in reconstruction like HILS Hill & Smith and perhaps ALU Alumasc - that sort of thing. On the flipside, SOM Somero Enterprises is based in Florida and although they are unlikely to be required for the laying of more huge Concrete Floors, it is possible that New Buildings get delayed as a result of the destruction. Insurance Companies could also suffer especially the Lloyds Syndicate ones but there are few of those left now on the Market.
The idea for this blog came about on Friday 1st September after a recent new IPO, Ramsdens Holdings RFX, came out with a very positive Trading Update and said “we expect our interim and full year profit before tax to be significantly ahead of market expectations.”
RFX operates Pawn Broker shops but also has a Retail Jewellery bit, Gold Dealing and also they do Foreign Exchange which sort of differentiates them from other Pawn Broker Stocks like H&T HAT. Anyway, as mostly is the case, the Trading Update came out at 7am but by around 9.30am I was reading on Tweets that a couple of Analysts/Brokers had already upgraded their Earnings Per Share (EPS) Forecasts to something like 16p in 2 years time. To be honest, the actual EPS Numbers are not the relevant point here - what struck me was just how fast this was to produce new Forecasts.
No need to remind you all that September (and October to an extent) have a very poor reputation for Markets globally and it is nice to have put in a strong week for my Portfolio last week, but I still am very much of the view that I need to lower my Spreadbet Exposure and I am not keen to buy much at all until we are through what is often a difficult period.
North Korea has been misbehaving again with claims that they have created and exploded a Hydrogen Bomb - as I understand it this is a major development for them as these have considerably more power than the mere ‘Atomic’ Bomb - which is of course bad enough. A big strategic advantage of a more powerful bomb is that the delivery mechanism (in others words the Firework they stick it on) doesn’t need to be particularly accurate with its targeting - an area where I suspect the North Koreans will be lacking. |
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